Moving up – could an apartment be your first home?
Are you in the market for your first home? Perhaps you’ve been dreaming the classic home buyer’s dream of a little house with a garden and a white picket fence? If this sounds like you, then you may have found that your property searches in 2015 were unrewarding – with the property market running hot and stiff competition for every opportunity.
Could it be time to revise your vision and start thinking about buying an apartment instead? A higher level of availability could make a trendy little apartment a great first step onto the property ladder! Whilst it may not be your first choice of property, an apartment could be a good way to get started and it could prove to be much more affordable for many first home buyers in 2016.
Why buy an apartment?
Depending on the size and location, apartments do tend to be less expensive than houses and this often means they make better entry level properties. Because they cost less, you will require a smaller deposit to get onto the property ladder. In the case of a new build apartment, you may be able to purchase off the plan and this could potentially save you money on stamp duty as well.
Generally speaking, maintenance costs are usually less on an apartment than on a house, simply because there is less to maintain. This can be a distinct advantage when buying your first home on a tight budget. This is particularly true if you buy a newly built apartment where all of the appliances, fixtures and fittings are brand new.
Additionally, many analysts believe that there may potentially be an oversupply of newly built apartments in many capital cities both now and over the next two years. This may have the effect of keeping prices down, making apartment and unit properties even more affordable.
A constant supply of new apartments may also restrict price growth on older, more established apartments. This may give you the opportunity to get a bargain buy and add value by renovating.
What to look for in an apartment purchase
Location. If you want to make sure that your apartment will appreciate in value whilst you own it, you should try to buy one in a location that will be popular with everyone and not just yourself. Look for a location that is close to public transport, cafes, restaurants, shopping and lifestyle amenities.
Before you consider buying a property in an outer suburb or a rural location, have a chat with us about the potential for rental and capital growth. An inner city or suburban location is usually more popular with first home buyers, but if you find an opportunity you can afford in an outer lying area, it is a good idea to do some careful research to help you make a wise decision.
Boutique. It is often true that apartments in smaller, boutique developments tend to be more attractive to renters than really large apartment block developments. Unless the apartment is really great – with an excellent facilities, location and local amenities, you may like to choose an apartment in a smaller development if you can. Of course, budget is a major factor but if you have the choice, go for a smaller apartment in a boutique development over a larger apartment in a really big block.
Parking. Off-street parking can be very important to some property buyers, so try to buy an apartment that comes with its own designated parking space if you can. If you can get one with a lock-up garage as well, then that’s even better! If you find an apartment you like that doesn’t have parking, carefully consider the availability of parking in the area and nearby the block.
Size. Apartments come in all shapes and sizes, but many first home buyers will be looking at one-bedroom apartments. If this is the case, look for one that is larger than 50sqm internally as some lenders may not want to finance an apartment that is smaller than this.
If your budget will stretch to a two-bedroom apartment, then go for it. You may be able to rent out the extra space to help pay off your home loan – which could be a bonus.
Easy lift access. Apartment buildings that do not have a lift and require you to walk upstairs to reach your apartment can be very inconvenient. New build apartments usually have lifts, but consider carefully before you buy an upper floor apartment that doesn’t have one!
Balcony. People like to be able to get outside when they’re at home, so look for an apartment with a balcony or private outside area if you can. Even a small outside area will make your apartment more attractive to potential buyers down the track and this may have a positive effect on your resale value.
Views. Apartments with nice views, or at least a sunny outlook tend to be the better buy. If you are buying off the plan, take particular care to consider what the outlook will be. If there are plans to build another apartment block right next door, you may find yourself with limited sunlight or a view of your neighbour’s bathroom if you’re not careful.
Do your research and get pre-approval on your financing
As with any property purchase, it is really important to do your research before you put down your deposit. Try to find out if there are a lot of new apartment developments planned nearby in the future as this will affect the value of the apartment and may limit capital growth. If you are buying off the plan, it is particularly important that you get a professional independent valuation on what the value of the apartment will be when it is finished.
Before you put down your deposit on any property – particularly if you will be buying off the plan, please talk to us about the financing to make sure it will be possible to arrange the amount you need to complete the purchase. Remember, having 10% of the purchase price for a deposit does not necessarily mean that a lender will automatically let you borrow the rest!
We’re here to help you work out your financial position and get pre-approval on your loan so that you can search for your first home with confidence. Even if you’re some time away from having your deposit ready, it could pay to chat with us about your plans – we may even be able to help you get there sooner. Please get in touch on the details below.